On October 12, Chongqing Yuxin Pingrui Electronics Co., Ltd. (hereinafter referred to as "Yuxin Electronics") issued the "Announcement on the Progress of Applying for initial public offering and listing of shares".
According to the announcement, on January 20, 2021, Yuxin Electronics submitted the application materials for the initial public offering of shares to the Shenzhen Stock Exchange and listing on the Growth Enterprise Market. On February 3, the Shenzhen Stock Exchange officially accepted the company's listing application. On March 3 and July 16, the Company received two rounds of audit inquiry letters from the Shenzhen Stock Exchange. On June 29 and September 28, the company has submitted relevant response documents to the two rounds of audit inquiry letters.
According to the prospectus, Yuxin Electronics intends to raise 358 million yuan for the industrialization project of key electronic control devices for digital inverter generators. However, Yuxin Electronics has the risk of unstable operating performance, high customer concentration, the controlling shareholder of the largest customer applying for bankruptcy reorganization, and the book value and proportion of inventory are increasing year by year.
Source: IC photo
The company's performance is not stable
It is greatly affected by trade barriers
According to the prospectus, Yuxin Electronics is mainly engaged in the research and development, production and sales of core electronic control components for general gasoline engines and terminal products. Its main products cover three categories: general gasoline electromechanical accessories, including igniters, flywheels, charging coils, etc.; generator power system accessories, including converters, voltage regulators, permanent magnet motor stators and rotors, etc.; electric garden tools and low-speed new energy vehicle accessories, such as drive motors and controllers, range extenders and controllers.
During the reporting period, Yuxin Electronics' core product, the general gasoline engine igniter, ranked first in the global market share, and the digital inverter generator converter ranked third in the global market share. In June 2019, Yuxin Electronics was selected by the Ministry of Industry and Information Technology as the first batch of specialized new "little giant" enterprises.
Yuxin Electronics was listed on the New Third Board in 2016 and entered the innovation layer of the New Third Board in 2020. After submitting the listing declaration materials to the Shenzhen Stock Exchange, Yuxin Electronics shares have been suspended since January 21, 2021, with a stock price of 13.33 yuan per share before the suspension and a total market value of 734 million yuan.
According to the prospectus (filing draft) updated by Yuxin Electronics on September 28, from 2018 to the first half of 2021, the company's operating income was 399 million yuan, 292 million yuan, 409 million yuan and 399 million yuan, and the net profit was 54.3771 million yuan, 35.0830 million yuan, 58.1048 million yuan and 39.6695 million yuan, respectively. It is not difficult to see that the performance of Yuxin Electronics is not stable, and its revenue and net profit in 2019 fell by 26.81% and 35.48% respectively year-on-year.
In this regard, Yuxin Electronics said that because China's general gasoline engine industry products are mainly exported to North America and other regions, before the start of the Sino-US trade war, foreign manufacturers expect future costs to rise, have accelerated the purchase and preparation from the domestic in advance, in 2018, the overall order of the domestic machinery industry increased significantly, and also correspondingly overdrafted the market demand for the next year, resulting in an overall decline in the industry in 2019. During the reporting period, the changes in the company's main business income were basically consistent with the overall fluctuations of the industry.
However, the general machinery industry still faces trade barriers. Yuxin Electronics said that if the trade policies of exporting countries continue to tighten, such as the continuous improvement of technical barriers to domestic enterprises R & D capabilities and quality control put forward higher requirements, tariff barriers directly weaken the price advantage of China's general machinery export products for a long time, the scope of double-reverse investigation expanded to vertical axis power products other than the whole machine products will increase the impact on the company's main customers, will have a greater adverse impact on the company's operating performance.
In addition, the fluctuation of raw material prices will also have a greater impact on the operating performance of Yuxin Electronics. During the reporting period, the proportion of raw materials in the cost of the main business of the company was 82.44%, 80.11%, 83.63% and 87.08%, respectively, accounting for a relatively high proportion, especially the frequent price changes of bulk commodities such as steel, aluminum, copper (enameled wire and high-voltage line) will directly affect the stability of the company's procurement costs.
The post-90s beauty board secretary is absolutely controlled
The chairman was involved in a bribery case involving local officials
Yuxin Electronics is a typical family business, Hu Yunping, Ding Deping and Hu Xinrui are the actual controllers of Yuxin Electronics, of which Hu Yunping and Ding Deping are husband and wife, and Hu Xinrui is the daughter of the two. Prior to the offering, the three held a total of 93.16% of the company's shares, both directly and indirectly. At the same time, Hu Yunping served as the chairman of the company, Hu Xinrui served as the director and secretary of the board of directors of the company, and Hu Xinrui's husband Li Yun served as the general manager of the company.
Yuxin Electronics, formerly known as Chongqing Yuxin Pingrui Electronics Co., Ltd., was established in 2003 as a limited liability company jointly funded by natural persons Hu Yunping and Ding Deping for RMB 3 million, with the shareholding ratios of 55% and 45% respectively.
In April 2011, Hu Yunping and Ding Deping transferred 35% and 25% of the shares of Yuxin Limited held by them to their daughter Hu Xinrui respectively. After the completion of the transfer, Hu Xinrui, Hu Yunping and Ding Deping held 60%, 20% and 20% of the shares respectively.
As of the end of the reporting period, the total number of shareholders of the company was 90, of which Hu Xinrui directly held 52.27%, Hu Yunping directly held 21.52%, and Ding Deping directly held 18.17%.
According to public information, Chairman Hu Yunping was born in October 1965 with a bachelor's degree and graduated from Chengdu Institute of Telecommunications Engineering (now University of Electronic Science and Technology of China) majoring in electronic measurement. From 1987 to 1995, he successively served as a technician, inspection section chief, process section chief and deputy director of Chongqing Radio No. 6 Factory; after 1995, he began to start his own business.
The controlling shareholder, Hu Xinrui, was born in May 1990 with a postgraduate degree and graduated from the University of Exeter in the United Kingdom. From 2014 to 2017, he was an engineer in the R&D and sales department of the company, responsible for the development of new product markets and overseas market maintenance; from August 2017 to April 2020, he was engaged in freelance; since April 2020, he has been the secretary of the board of directors of the company; and since September 2020, he has been a director of the company.
In the second round of audit inquiry letter issued by the Shenzhen Stock Exchange, it was proposed that the issuer was changed to a joint-stock limited company in September 2015, and the relevant shareholders completed the payment of the individual tax involved in the share reform in January 2021. The issuer is requested to explain whether the payment of the above individual tax is legal and compliant.
Yuxin Electronics disclosed in the reply document that on September 8, 2015, the shareholders of the company's share reform, Hu Xinrui, Hu Yunping and Ding Deping, were subject to personal income tax for the issuer's undistributed profit of 42 million yuan in proportion to the proportion of shares held. On 10 January 2017, the local taxation bureau of Jiulongpo District, chongqing Municipality, issued the "Filing of Individual Income Tax Payment in Installments for the Conversion of Share Capital", confirming that the amount of individual income tax payable by the shareholders of the issuer, Hu Xinrui, was 5.04 million yuan, and the amount of personal income tax payable by Hu Yunping and Ding Deping was 1.68 million yuan, which was paid in five installments from January 2017 to January 2021. As of January 21, 2021, the personal income tax of RMB8.4 million involved in the shareholders involved in the share reform of the issuer has been paid in full on schedule.
According to the prospectus, Chairman Hu Yunping was involved in the bribery case of Wang Yuankai, former member of the Standing Committee of the Jiulongpo District Committee of the Chongqing Municipal Committee of the Communist Party of China, director of the United Front Work Department of the District Committee, and member of the Standing Committee of the Nanchuan District Committee of the Chongqing Municipal Committee of the Communist Party of China. (2018) Yu Xing Zhong No. 162 Criminal Ruling states that from 2003 to 2016, Wang Yuankai took advantage of his position to accept the entrustment of Hu Moumou (i.e., Hu Yunping), the general manager of Yuxin Electronics, to provide assistance for his company in the transfer of land in Hangu Town for the construction of factories, coordinating the procedures for building plants, demolishing from Xipeng Park to high-tech zones, and replacing real estate certificates for some illegal factories. To this end, Wang Yuankai accepted bribes totaling 280,000 yuan from Hu Moumou.
Yuxin Electronics said that during the investigation of the case, Hu Yunping actively assisted in the investigation according to the requirements of the case-handling personnel, accepted the questioning of the case-handling personnel and explained the relevant situation; Hu Yunping continued to work normally, so far there was no case filed and investigated by the public security organs or procuratorial organs, and the equity was frozen by the judicial organs, and the company has also been carrying out various production and operation activities normally and has not been affected by the case. Hu Yunping's act of providing funds to Wang Yuankai occurred in order to promote the above-mentioned relevant land, plant construction procedures, and real estate certificate handling procedures under Wang Yuankai's supervision, but the company did not obtain improper benefits such as lower land transfer price, fine reduction, and reduction of fines because of Hu Yunping's act of providing funds to Wang Yuankai. Neither Hu Yunping nor Yuxin Electronics has the possibility of being held criminally responsible.
High customer concentration
The controlling shareholder of the largest customer applied for bankruptcy reorganization
According to the prospectus, the main customers of Yuxin Electronics include Loncin General Motors, Bailitong, Honda Power, Yamaha, JAC Power, Kohler, GENERAC and other well-known enterprises in the field of domestic and foreign machinery. The company is at risk of a high concentration of customers.
During the reporting period, the total sales of Yuxin Electronics to the top five customers accounted for 65.11%, 61.32%, 58.51% and 57.30% of the operating income of the current period, respectively. Among them, Loncin General (603766. SH) has always been the number one customer of Yuxin Electronics. During the reporting period, the sales revenue of Yuxin Electronics to Loncin GM accounted for 29.63%, 25.76%, 35.98% and 26.90% respectively.
It is worth noting that on September 28, 2021, Loncin GM issued an announcement that the controlling shareholder applied to the court and was pre-restructured for filing because it could not pay off its debts as they fell due, had bankruptcy reasons but had reorganization value and reorganization feasibility. This matter may result in a change in Loncin's general control.
Yuxin Electronics said that the company and Loncin General Are located in the same Chongqing area and have the geographical advantage of supply chain support. The company has long been deeply integrated and coordinated with Loncin General in terms of products, technologies and markets, and the stickiness of both sides has been continuously enhanced, and the business has been greatly affected by the operation of Loncin General and has commercial rationality. Loncin GM has disclosed the debt crisis of Loncin Holdings in its 2018 annual report, which is not an emergency. According to Loncin GM's regular reports, since the debt crisis of Loncin Holdings appeared, the production and operation of Loncin GM have been normal, and the debt crisis of Loncin Holdings has not caused a significant adverse impact on Loncin GM.
However, it is undeniable that as of June 30, 2021, the balance of accounts receivable from Loncin General Was 40.1874 million yuan, accounting for 32.40% of the balance of accounts receivable in the current period. The high balance of accounts receivable is also one of the heart diseases of Yuxin Electronics.
According to the prospectus, at the end of each reporting period, the balance of the company's accounts receivable was 83.4674 million yuan, 76.8778 million yuan, 103 million yuan and 124 million yuan, accounting for 20.93%, 26.34%, 25.29% and 20.04% of the operating income in the same period, respectively. Yuxin Electronics said that if the company cannot properly manage the recovery of funds or the customer's financial situation deteriorates, and the accounts receivable cannot be recovered as scheduled or cannot be recovered, the risk of bad debt losses is not excluded.
At the same time, Yuxin Electronics also has the risk of the proportion of inventory book value rising year by year. According to the prospectus, at the end of each reporting period, the carrying amount of the company's inventory was 50.0747 million yuan, 58.5695 million yuan, 104 million yuan and 140 million yuan, accounting for 11.57%, 12.69%, 20.13% and 21.48% of the total assets at the end of the current period, respectively, and the inventory turnover rate was 5.52, 3.76, 3.41 and 3.66 (annualized) respectively.
Yuxin Electronics said that due to the company's product types and models, the company needs to maintain a certain amount of safety inventory for each model of finished products, especially for export products or domestic customers long-term use of products, the company's inventory of such products is large. If future customer demand changes, resulting in delays in inventory sales or even cancellation of contracts, there may be a loss of price decline or an increase in impairment provisions.
For the progress of Yuxin Electronics' IPO, Red Star Capital Bureau will continue to pay attention.
Red Star News reporter Ren Zhijiang
Edited by Tao Yueyang
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